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Is OIBYX a Strong Bond Fund Right Now?

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There are plenty of choices in the International Bond - Developed category, but where should you start your research? Well, one fund that may not be worth investigating is Oppenheimer International Bond Y (OIBYX - Free Report) . OIBYX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of International Bond - Developed funds is an area filled with different choices, like OIBYX. International Bond - Developed funds focus on fixed income securities from developed nations besides the United States. This usually results in countries like Japan, Germany, the UK, France, and Australia dominating the list of top holdings. Funds here offer geographic diversification, but they can also introduce currency risk into the picture as well.

History of Fund/Manager

OIBYX finds itself in the Invesco family, based out of Kansas City, MO. Oppenheimer International Bond Y debuted in October of 2004. Since then, OIBYX has accumulated assets of about $1.02 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 2.79%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 2.95%, which places it in the middle third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 13.23%, the standard deviation of OIBYX over the past three years is 12.74%. Over the past 5 years, the standard deviation of the fund is 10.47% compared to the category average of 11.14%. This makes the fund less volatile than its peers over the past half-decade.

OIBYX carries a beta of 0.79, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.54, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, OIBYX has 24.55% in high quality bonds rated at least 'AA' or higher, while 40.37% are of medium quality, with ratings of 'A' to 'BBB'. The fund's junk bond component-bonds rated 'BB' or below-is at 27.33%, giving OIBYX an average quality of BBB. This means that it focuses on medium quality securities.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, OIBYX is a no load fund. It has an expense ratio of 0.75% compared to the category average of 0.93%. So, OIBYX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.

Bottom Line

Overall, Oppenheimer International Bond Y ( OIBYX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Oppenheimer International Bond Y ( OIBYX ) looks like a somewhat weak choice for investors right now.

For additional information on the International Bond - Developed area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into OIBYX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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